analyzing consumer behavior

Analyzing Analyzing Consumer Consumer BehaviorBehavior

Chapter FourChapter Four

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 4-2

Key Learning PointsKey Learning Points

Concept and activity of market Concept and activity of market segmentationsegmentationSegmentation implementation issuesSegmentation implementation issuesUnderstanding consumer motives for Understanding consumer motives for buying behaviorbuying behaviorUnderstanding how consumers make Understanding how consumers make purchase decisionspurchase decisionsImportance of understanding where and Importance of understanding where and when consumers purchasewhen consumers purchaseImplications for global and technology-Implications for global and technology-based marketsbased markets


Customer AnalysisCustomer Analysis

Customer analysis addresses five Customer analysis addresses five questions:questions:

Who are the current and potential Who are the current and potential customers for the product or service?customers for the product or service?

Why do they buy?Why do they buy?

How do they make purchasing decisions?How do they make purchasing decisions?

Where do they buy the product or Where do they buy the product or service (what channels of distribution service (what channels of distribution are used)?are used)?

When do they buy?When do they buy?


Customer AnalysisCustomer Analysis

Customer analysis should ALSO Customer analysis should ALSO study:study:

Competitors’ customers.Competitors’ customers.Former customers.Former customers.Nonusers.Nonusers.


Who Are the Customers?Who Are the Customers?

Market segmentation is the key.Market segmentation is the key.Segmentation breaks mass markets Segmentation breaks mass markets into groups with different buying into groups with different buying habits.habits.

Segmentation schemes are critical Segmentation schemes are critical in certain situations.in certain situations.

The segmentation process makes The segmentation process makes use of both primary and secondary use of both primary and secondary data.data.



Benefits of market Benefits of market segmentation:segmentation:

More efficient than mass More efficient than mass marketingmarketing

CostCost

More effective than mass More effective than mass marketingmarketing

CustomizationCustomization



Single-customer segments Single-customer segments make sense in certain make sense in certain circumstances:circumstances:

Small number of customersSmall number of customers

One-to-one marketing and mass One-to-one marketing and mass customizationcustomization


Discussion QuestionDiscussion Question

Using one-to-one marketing effectively Using one-to-one marketing effectively requires that marketers have access to requires that marketers have access to extensive databases.extensive databases.

1.1. What particular database fields might What particular database fields might Club Med’s marketers use in developing Club Med’s marketers use in developing one-to-one marketing appeals for their one-to-one marketing appeals for their new line of luxury hotels?new line of luxury hotels?

2.2. Can you think of an example of a product Can you think of an example of a product or service that offers consumers mass or service that offers consumers mass customization opportunities? Explain.customization opportunities? Explain.


Table 4.1Table 4.1Geographic & Psychographic Geographic & Psychographic

Segmentation VariablesSegmentation Variables


Table 4.1Table 4.1Demographic Segmentation Demographic Segmentation

VariablesVariables


Table 4.2Table 4.2Behavioral VariablesBehavioral Variables


Table 4.3Table 4.3Consumption Index: Dental Consumption Index: Dental

AccessoriesAccessories


Table 4.4Table 4.4Product Preferences by Stage in Product Preferences by Stage in

the Family Life Cyclethe Family Life Cycle


Figure 4.1Figure 4.1Generational CohortsGenerational Cohorts


Table 4.5Table 4.5Ethnic Differences in ConsumptionEthnic Differences in Consumption



Psychographics:Psychographics:VALS is the most popular system.VALS is the most popular system.

VALS segments individuals into VALS segments individuals into eight groups based on:eight groups based on:

Primary motivation, andPrimary motivation, and

Resources.Resources.



VALS Psychographic GroupsVALS Psychographic Groups

Innovators Innovators

ThinkersThinkers

ExperiencersExperiencers

AchieversAchievers

BelieversBelievers

StriversStrivers

MakersMakers

SurvivorsSurvivors


Figure 4.2Figure 4.2Sample VALS QuestionsSample VALS Questions

See all the items . . .Take the See all the items . . .Take the VALS Survey!!


Figure 4.3Figure 4.3How Tech Customers Stack UpHow Tech Customers Stack Up


Discussion QuestionDiscussion Question

Media Junkies are entertainment oriented, have high resources, but are pessimistic toward new technology.

If you worked for a TV network website or for Hulu.com or a TV network website, would you target this group? Why or why not?



More on segmentation:More on segmentation:Occasion segmentation can be Occasion segmentation can be profitable.profitable.

Geographic, demographic, and Geographic, demographic, and usage are typically used.usage are typically used.

More businesses are adding More businesses are adding psychographics.psychographics.



Segmenting in Technology-Based Segmenting in Technology-Based Markets:Markets:

Not all consumers are equally likely Not all consumers are equally likely to adopt new innovations.to adopt new innovations.The diffusion of innovations model The diffusion of innovations model describes how innovations are describes how innovations are adopted throughout the marketplace.adopted throughout the marketplace.Positive word-of-mouth is often a key Positive word-of-mouth is often a key characteristic in new product characteristic in new product adoption. adoption.


Figure 4.4Figure 4.4Diffusion of InnovationsDiffusion of Innovations



Marketing Research Implications: Marketing Research Implications: Data CollectionData Collection

Primary data collected via a survey is Primary data collected via a survey is often used to understand customers.often used to understand customers.

Secondary data should also be Secondary data should also be explored:explored:

Government: Government: http://www.census.gov/

Trade / professional publicationsTrade / professional publications

Syndicated dataSyndicated data


Table 4.6Table 4.6MRI Travel DataMRI Travel Data


ActivityActivity

Review Table 4.6 in your textbook Review Table 4.6 in your textbook and develop a profile of individuals and develop a profile of individuals who scuba dive. As you do so, pay who scuba dive. As you do so, pay particular attention to index particular attention to index numbers. numbers.

What differences do you note What differences do you note between this profile and that of the between this profile and that of the person who goes to the beach for person who goes to the beach for vacation?vacation?


Figure 4.5Figure 4.5Sample PRIZM SegmentSample PRIZM Segment

PRIZM Multi-media Presentation


ActivityActivity

Visit the “You Are Where You Live” zip code look-up to learn about the PRIZM groups that characterize YOUR zip code!

Compare your zip code results to the groups that characterize zip code 90210.



Marketing Research Implications: Marketing Research Implications: Developing Target MarketsDeveloping Target Markets

Parsimony must be considered.Parsimony must be considered.

Selected segmentation scheme Selected segmentation scheme must statistically explain must statistically explain differences in purchasing behavior differences in purchasing behavior or other key variables.or other key variables.

Behavior = Behavior = f f (segmentation (segmentation variables).variables).



Marketing Research Implications: Marketing Research Implications: Developing Target MarketsDeveloping Target Markets

Other considerations when selecting Other considerations when selecting one or more segments to target:one or more segments to target:

Segment sizeSegment sizeSegment growth rateSegment growth rateEnvironmental factors associated Environmental factors associated with the segmentwith the segmentPotential competitive positionPotential competitive position


IllustrationIllustration

Though demand exceeds available Though demand exceeds available supply, Harley-Davidson still needs supply, Harley-Davidson still needs to better understand its customer to better understand its customer base.base.


Illustration Table 4.7Illustration Table 4.7Harley-Davidson Segmentation Harley-Davidson Segmentation

Study/Lifestyle FactorsStudy/Lifestyle Factors


Illustration Tables 4.8 and Illustration Tables 4.8 and 4.94.9

Harley-Davidson Segmentation Harley-Davidson Segmentation SchemeScheme


Figure 4.6Figure 4.6Simplified Customer Behavior Simplified Customer Behavior

ModelModel


Why Do Consumers Buy?Why Do Consumers Buy?

The purchase decision process The purchase decision process begins with need recognition.begins with need recognition.

Maslow’s Hierarchy of Needs:Maslow’s Hierarchy of Needs:Five ordered levels of needsFive ordered levels of needs

Most relevant for understanding Most relevant for understanding consumer needsconsumer needs

BENEFITS not attributes are key BENEFITS not attributes are key factor in motivating consumers to factor in motivating consumers to purchase.purchase.



Marketing managers must translate product Marketing managers must translate product features into benefits. The Goodyear web page features into benefits. The Goodyear web page provides an excellent example of this premise provides an excellent example of this premise in practice.in practice.


How Do Consumers Make How Do Consumers Make Purchase Decisions?Purchase Decisions?

Search For Alternatives follows Search For Alternatives follows Need Recognition.Need Recognition.Sources of information may be:Sources of information may be:

Internal, orInternal, orExternal.External.

The amount of information search The amount of information search undertaken is difficult to predict.undertaken is difficult to predict.



Search For AlternativesSearch For AlternativesResults in the creation of three sets Results in the creation of three sets of options:of options:

Evoked or consideration setEvoked or consideration setInert setInert setPurchase setPurchase set

Primary research can determine in Primary research can determine in which set consumers place the which set consumers place the brand.brand.



Evaluating Options in the Evaluating Options in the Consideration Set:Consideration Set:

Product is decomposed into Product is decomposed into attributes.attributes.Multi-attribute model is used to Multi-attribute model is used to make choice.make choice.Four key questions are raised by Four key questions are raised by the multi-attribute model.the multi-attribute model.


Key Questions Raised by Key Questions Raised by the Multi-Attribute Modelthe Multi-Attribute Model

Which attributes do customers Which attributes do customers use to define a product?use to define a product?

How do we determine how much How do we determine how much of each attribute a brand of each attribute a brand possesses?possesses?

How are the importance weights How are the importance weights determined?determined?

How do customers combine prior How do customers combine prior information to make choices?information to make choices?


Table 4.10Table 4.10Simplified Customer Behavior Simplified Customer Behavior

ModelModel



Post purchase Behavior:Post purchase Behavior:Consumers form expectations Consumers form expectations about the product prior to usage.about the product prior to usage.Consumers evaluate product Consumers evaluate product during and after consumption.during and after consumption.Future purchases are highly Future purchases are highly dependent on post purchase dependent on post purchase evaluation.evaluation.



External influences help to External influences help to shape the way consumers shape the way consumers make purchase decisions. make purchase decisions. Key external influences include:Key external influences include:

Group influences.Group influences.Product class influences.Product class influences.Situational influences.Situational influences.



Family and Friends:Family and Friends:Example: Family life cycleExample: Family life cycle

Social class:Social class:Upper, middle, working, and lower classesUpper, middle, working, and lower classes

Culture:Culture:Extremely important in global marketingExtremely important in global marketing

See Figure 4.8.See Figure 4.8.


Figure 4.8Figure 4.8Analysis for Marketing DecisionsAnalysis for Marketing Decisions



Main Elements of CultureMain Elements of Culture

LanguageLanguage

ReligionReligion

Values and Values and attitudesattitudes

EducationEducation

Social Social organizationorganization

Technology Technology and material and material cultureculture



Cultural differences may be found Cultural differences may be found in the same neighborhood, such as in the same neighborhood, such as Little Italy.Little Italy.


““Cultural differences are Cultural differences are particularly important in a global particularly important in a global marketing context. The biggest marketing context. The biggest issue facing companies wanting to issue facing companies wanting to market products in other countries market products in other countries is the fact that significant is the fact that significant differences in culture can affect differences in culture can affect the way customers respond to the the way customers respond to the product and the market strategy.”product and the market strategy.”

- Russell S. Winer



Product class Product class influences influences affecting affecting technology:technology:

Rogers’ study – Rogers’ study – five factors five factors identifiedidentifiedPotential for Potential for network network externalitiesexternalitiesPerceived riskPerceived risk

Many factors influence adoption Many factors influence adoption for this pen-based video camera.for this pen-based video camera.



Several situational influences Several situational influences exist:exist:

Physical surroundings Physical surroundings

Social surroundingsSocial surroundings

Temporal factorsTemporal factors

Task definitional factorsTask definitional factors

Antecedent statesAntecedent states



Buying Roles in Buying Roles in Group Buying DecisionsGroup Buying Decisions

InitiatorInitiator

InfluencerInfluencer

DeciderDecider

PurchaserPurchaser

UserUser


Where and When Do Where and When Do Customers Buy?Customers Buy?

Where do customers buy?Where do customers buy?

When do customers buy?When do customers buy?Understand purchase timing.Understand purchase timing.

Timing issues influence both Timing issues influence both marketing and operations.marketing and operations.


Executive SummaryExecutive Summary

Understanding consumers is critical.Understanding consumers is critical.

Descriptive information is needed.Descriptive information is needed.

Learn the benefits consumers seek.Learn the benefits consumers seek.

The buying process is complex.The buying process is complex.

Understand where consumers buy.Understand where consumers buy.

Know when consumers buy.Know when consumers buy.


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